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so back to gamestop gamestop and gamestop gamestop gamestop but gamestop a key stock behind the market chaos is still surging well this certainly felt like the longest week of my life a lot has been going on since i posted this video on saturday talking about the massive short squeeze with gamestop if you haven't seen that yet i recommend watching that first and then coming back here so you understand the basics and if you're a new subscriber welcome to my channel where i cover different ways to make money online both with the stock market and without it and before i get any further just a disclaimer that i am not a financial professional this is not investing advice and as of today friday the 29th i am holding shares of gamestop so i'm gonna try to cut through all the noise and misinformation to give you an update on what's been happening gamestop closed friday at 65 and one cent since i posted that video on saturday night gamestop has been on an absolute tear it opened monday at 96.80 and closed today at 325 for a 228 and 80 cent gain it even hit an all-time high pre-market early thursday of 513 this story has been all over the news this week with a lot going on basically you have a lot of noise a lot of distractions and if you're in gamestop as a trader it can be easy to freak out and want to sell so let me cover some key things about this whole situation and if you're in this trade this can hopefully help you out so we're at a high of 513 dollars pre-market thursday and then before the market opened many brokerages disabled investors ability to buy shares of gamestop amc blackberry and others in the name of protecting investors this caused gamestop's stock to fall to 261 dollars by the time the market opened that's a 252 drop in roughly two hours absolutely insane the question here is which investors are they really protecting by barring retail investors from buying buying drives the price up and if you block tens of thousands of retail investors from buying you're suppressing the price and helping out the hedge funds that went short on these stocks get out of their position this seemed like another attempt to scare retail traders into panic selling now while it seemed like just about all the major brokerages had some limitations i'm mainly trading with td ameritrade which still let me buy shares it seemed that the main brokerages that were restricted were brokerages that used apex clearing as their clearinghouse like weeple and tastyworks real quick let me play soundbite from weeble ceo to explain what happened on their end there is a two day settlement between if you buy the stock today those brokerage firms that you bought that stock on have to fund that trade with the with the clearing central house called dtc for two whole days and because of the volatility of these stocks dtc has made the cost of that of the collateral for the two two-day holding period extremely expensive and we just can't afford well not we will we're not a clearing firm but our clearing firm simply cannot afford the cost so robinhood used to use apex as their clearing firm then a few years ago they decided to take it in-house so now robinhood is their own clearing firm and they have the same kind of capital requirements so while your brokerage like robinhood or td ameritrade helps you execute your trade the clearing firm is the party responsible for actually handling the transaction they are essentially the middleman taking on the risk involved in a transaction if one party fails to pay so as the middleman apex clearing has to put up collateral on behalf of the broker and the customer to help settle trades if their risk becomes too great like if they are worried one party of the transaction will be unable to pay then they can tell the brokerages that they won't be able to settle trades for specific tickers like gamestop that's what we saw happen on thursday i'm guessing since gamestop's price was increasing so rapidly apex must have been concerned about short's ability to pay or customers buying on margin may get margin called when a stock swings too much in the opposite direction real quick let me explain what buying on margin is buying a margin is when you sign up for something like robinhood and start a transfer from your bank account robinhood will let you buy shares immediately even though it takes several days for your money to actually settle into your robinhood account so essentially you're borrowing money from robinhood to make your trade before your money actually gets there so basically brokers like robin hood need to have more money set aside for all these trades so the clearinghouses don't get screwed over now i don't really want to speculate as to whether there is a greater conspiracy at play here with brokerages or market makers having their own agendas to shut down the retail trader and help out the short hedge funds what i do know is the hedge fund's citadel and point 72 bailed out melvin capital to the tune of 2.75 billion dollars after melvin capital suffered 30 losses in the last three weeks mainly from shorting citadel has a subsidiary called citadel securities which is a market maker market makers play an important role by providing markets with liquidity breaking that down even more simply market makers can decide whether to take the other side of a trade that comes in or they can send it to the marketplace to have an existing party take that other side of the trade they get to profit the difference between the price someone is willing to pay and the price someone sells for known as the bid ask spread the reason i bring up citadel is because robin hood sells their customers order flow to citadel and other companies so these companies could quickly see a bulk of robin hood users orders come in and then front run them meaning they could see that there are a thousand buy orders of gamestop at ten dollars so they could go try to scoop up gamestop shares for nine dollars and ninety cents and then turn it around and sell them to you for ten dollars pocketing that ten cent difference in mind you citadel was fined 22 million dollars by the sec in 2017 for screwing over retail investors with their algorithms that do this so while that is a pretty crappy practice that takes place it's not just robin hood most retail brokerages sell their customers order flow to these high frequency traders but all that to say it's a predatory practice that you should know about and it adds to this main street versus wall street narrative so even on friday today when i believe most brokerages allowed normal cash buying of gamestop shares robin had still placed limits on their customers first restricting to five shares if you didn't already own any and then further restricting it to two shares and then just one share it sounds sketchy but i think it comes down to robin hood needing more capital they had to take hundreds of millions in loans from banks this week and raise an additional one billion dollars from existing investors to handle this surge of new users buying up shares of volatile companies like gamestop amc and blackberry regardless if you are unhappy with robinhood i personally wouldn't recommend it you can transfer your shares to another brokerage but you will have to pay 75 to do so i'll put a link in the description if that's something you'd like to do a lot of investors may be wondering if the squeeze has already happened because the price has already gone up like 400 this week alone you also had cnbc announced that melvin capital who were heavily short on gamestop sell out of their position i personally am skeptical of this and while it may be possible they've closed out all their shorts in reality we don't know for sure if they exited their entire short position or just partially covered for some reason they were running promoted posts about melvin capital closing their shorts which to me seems a little fishy remember cnbc is not your friend i personally think they are on the side of wall street not people like you and me the latest data from s3 partners shows 57.83 million shares are still shorted which is 113 of the available shares out there it seems like some funds who were short game stop at maybe 8 or 10 they may have been able to close out of their short position but new shorts have come in and taken their place so let's say you thought gamestop would go bankrupt and drop from eight dollars to zero dollars a share so you went short when they didn't go bankrupt and instead their share value increased to like 100 you may have bought back those shares to close your short and take the l well another fun could step in and say well 100 is way too high for gamestop so i'm going to enter a short position here betting it'll go back to 20 well when the price hit 200 maybe they decided to close their short by buying the stock back at 200 and then another fund could attempt to short here betting it will fall below 200 so in theory you could just have an endless cycle of hedge funds trying to short gamestop at higher and higher levels and then get burnt when the price increases far beyond what they expected so knowing we have over 50 million shares short if shorts need to cover where are they going to get their shares from well maybe they could get some shares from a paper-handed goofball on wall street bets but individual investors only account for 16 of gamestop's float or about 8 million shares the rest of the float is owned by institutions and funds like blackrock fidelity and vanguard so it is possible that these funds may sell around current levels to take advantage of the inflated price so when you're watching gamestop trade throughout the day make sure you keep an eye on volume this shows you how many shares are being transacted per candlestick so here for instance we had about 216 000 shares trade in just one minute this is one of the reasons why you don't have to worry as much about the shorts covering in after hours or pre-market trading there just simply isn't enough volume during this time to buy enough shares if they wanted to so has the squeeze happened it's actually currently happening you have shorts suffering massive losses and the price working its way up to levels disconnected from the fundamentals of the business which is exactly what retail traders were hoping for one thing that has been strange is we haven't heard a peep from gamestop as a company with all this non-stop coverage about the whole saga they've remained silent so many are speculating as to whether or not they'll release more shares at these crazy high prices because this would give them a huge infusion of cash which they could definitely use as a company to help them pivot away from retail it would help out the shorts to an extent by providing more available shares for them to exit from some of their positions but it would also provide some stabilization for the price and would be a long-term bullish outlook for the company according to youtuber trading with bruce whose gamestop live stream i've been enjoying all week they could have been under a gag order or still developing strategy and we could see them make an announcement once january is over this may be how the squeeze comes to an end if hype dies down over the next few weeks and new shares are released but with the way things have been going it could take shorts weeks to unwind from their positions and end squeeze there's been a lot of misinformation in the media and on twitter and just about everywhere else when wall street bets on reddit went private to handle the technical difficulties of having over 1 million new members overnight and unprecedented traffic everyone on twitter freaked out stating such falsehoods like reddit banned wall street bets when anyone who's been on wall street beds for more than a month knows they take it private every once in a while to take care of some issues it's simply more fear-mongering to scare us retail traders out of our position you then also have other posts on reddit or even in these comments sections claiming blackberry or amc or others are going to be the next gamestop and while those stocks were heavily shorted in my opinion they are merely distractions from gamestop they don't have over 100 shares shorted with low float and strong bullish catalysts like gamestop anyone who missed out on gamestop is desperately looking to find something that will work similarly i just don't see it happening the same way with these other companies you also have reports of the sec and government monitoring the situation to me that's a boilerplate response for something that has made international headlines remember the amount of money being traded here with gamestop is mere peanuts compared to the rest of the market and the government would love to collect your capital gains tax on your earnings my point here is to try and parse through the noise to find actual facts that can help you be more informed wall street hates losing money and will do whatever they can to come out on top i had a lot of people messaging me and asking if it's too late to jump in on gamestop and the thing is we could see this stock go higher much higher or we could see it come crashing back to sub 100 levels if you want to enter a position with prices this high that is up to you i personally would not the last time i bought shares was on thursday when i bought the effing dip for 141 dollars a share my cost basis is still below 60 dollars and that is where i'm personally comfortable being and while i do have pretty decent diamond hands i also want to be responsible with my trading so i am still holding a fair amount of shares but i have locked in profit the rest is just house money so i can take the risk of holding it as long as i'd like literally house money though i want to buy a house if you've been in this trade i hope we've held it together this week as i know i have been stressed as can be waking up at 3am with anxiety i also hope this video cleared up some confusion or questions you may have had and hopefully i didn't over complicate things there was so much happening this week in relation to gamestop and i'm running on fumes i hope you can get some sleep this weekend and i will see you on the moon let me know if you have any questions in the comments below i will also do a video recapping my entire trade once this is all over so make sure you're subscribed and then hit the thumbs up button to enable diamond hands i will see you in the next video